EXHIBIT 10.9
THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT FOR DISTRIBUTION, AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT THERETO UNDER SUCH ACT UNLESS SOLD
PURSUANT TO RULE 144 OF THAT ACT OR UNLESS THE SALE, PLEDGE, HYPOTHECATION OR
TRANSFER IS OTHERWISE EXEMPT FROM REGISTRATION. THE COMPANY MAY REQUEST A
WRITTEN OPINION OF COUNSEL (FROM COUNSEL ACCEPTABLE TO THE COMPANY) SATISFACTORY
TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION
WITH SUCH SALE, PLEDGE OR HYPOTHECATION, OR OTHER TRANSFER. THIS NOTE OR ANY
SECURITY ISSUABLE UPON THE CONVERSION HEREOF MUST BE SURRENDERED TO THE COMPANY
OR ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO THE SALE, PLEDGE,
HYPOTHECATION OR ANY OTHER TRANSFER OF ANY INTEREST IN THIS NOTE OR ANY SUCH
SECURITY.
SSP SOLUTIONS, INC.
CONVERTIBLE BRIDGE NOTE
$_________ _____________, 2003
Due on Demand only after
November 30, 2003
For value received, SSP SOLUTIONS, INC., a Delaware corporation (the
"Company"), hereby promises to pay, on demand on or after November 30, 2003, to
the order of ____________________ (the "Holder"), the principal sum of
_________________ and no/100ths Dollars ($________.00). This Note is one of
several Convertible Bridge Notes, $1,500,000 aggregate principal amount, issued
by the Company pursuant to a Bridge Loan Agreement of even date herewith (the
"Loan Agreement"), and is PARI PASSU with each of such notes.
1. CONVERSION OF PRINCIPAL AND INTEREST INTO EQUITY. The outstanding
principal amount of this Note, together with all accrued but unpaid interest
hereunder (the "Outstanding Balance"), shall automatically convert into shares
of Series A Preferred Stock upon the closing (the "Closing"), if any, of the
sale of the Company's Series A Preferred Stock to the Holder and to other
investors in accordance with the terms of a securities purchase agreement and
the agreements and documents contemplated thereby, all substantially on the
terms set forth in the Confidential Term Sheet of the Company, dated August 20,
2003, relating to the Series A Preferred Stock of the Company ("Preferred
Shares"); PROVIDED, HOWEVER, that for purposes of determining the number of
Preferred Shares to be received by the Holder upon such conversion, the Holder
shall be deemed to have tendered 110% of the Outstanding Balance as of the
Closing. In consideration for the loan evidenced by this Note, the Holder of
this Note shall receive a Warrant executed by the Company and in the form
attached to the Loan Agreement as EXHIBIT B thereto for the issuance of ________
shares of common stock of the Company.
2. PAYMENT OF INTEREST AND PRINCIPAL. This Note will bear interest at a
rate of 10% per annum. Accrued interest on this Note shall be due and payable
monthly on the last day of each calendar month beginning November 30, 2003 (the
"Outside Date"), or upon conversion or demand. If the Closing does not occur by
the Outside Date, the full outstanding principal amount of this Note, together
with all amounts of accrued but unpaid interest hereunder, shall be payable on
the demand of the Holder made at any time after the Outside Date.
3. PREPAYMENTS. The Company may prepay all or any part of the principal
balance of this Note at any time, without penalty or premium, from and after the
Outside Date. All payments made on account of the indebtedness evidenced by this
Note shall be applied first to accrued but unpaid interest, if any, and the
remainder shall be applied to principal. All computations of interest hereunder
shall be made on the basis of a year consisting of 365/366 days for the actual
number of days elapsed, counting the day of disbursement and not counting the
day of payment.
4. NONPAYMENT OF PRINCIPAL OR INTEREST. Any and all amounts of
principal and interest hereunder if not paid when due shall accrue interest at
the rate of 18% per annum or the maximum amount permitted under applicable law,
whichever is lower. If the Company fails to pay any amount of principal or
interest hereunder when due, the Company agrees to pay the Holder's costs of
collection, including the Holder's attorney's fees and expenses, whether or not
any court proceeding is instituted in connection with such collection.
5. MISCELLANEOUS. This instrument and the rights and obligations of all
persons hereunder shall be governed by the laws of the State of California
applicable to contracts made and to be performed in that state. The Company
hereby waives demand, presentment for payment, notice of dishonor, protest and
notice of protest and nonpayment. Any failure of the Holder to exercise any
right available hereunder or otherwise shall not be construed as a waiver of the
right to exercise the same or any other right at any other time. No waiver by
the Holder of any default shall be effective unless made in writing nor operate
as a waiver of any other future default. All rights and remedies of the Holder,
whether provided for herein, in any other written document or conferred by law,
are cumulative and concurrent and the exercise of any one or more of them shall
not preclude the simultaneous or later exercise by the Holder of any or all
other rights, powers or remedies. The Company hereby irrevocably authorizes any
attorney of any court of record to appear for the Company in such court at any
time after any amount under this Note becomes due, whether by acceleration or
otherwise, and confess a judgment without process in favor of the Holder or any
other holder of this Note for the amount then due hereon, together with costs of
collection, including the Holder's attorney's fees and expenses, and to release
and waive all errors that may intervene and consent to immediate execution upon
such judgment, hereby ratifying and confirming all that said attorney may do by
virtue hereof. If any part of this Note shall be adjudicated invalid or
unenforceable, then such partial invalidity or unenforceability shall not cause
the remainder of this Note to become invalid or unenforceable, and if any
provision hereof is held invalid or unenforceable in one or more of its
applications, the Company agrees that said provision shall remain in effect in
all valid and enforceable applications.
6. NOTICES. All notices and other communications provided for hereunder
shall be in writing and delivered, mailed or transmitted by any standard form of
telecommunication. Notices and other communications to the Holder shall be
directed to it at its address noted on the Company's records; and notices and
other communications to the Company shall be directed to it at its address at
SSP Solutions, Inc., 00000 Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx 00000; or, as to
each party, at such other address as shall be designated by such party in a
written notice to the other party pursuant hereto. Any notice or other
communication shall be deemed to have been duly given (a) when sent by Federal
Express or other overnight delivery service of recognized standing, on the
business day following deposit with such service; (b) when mailed by registered
or certified mail, first class postage prepaid and addressed as aforesaid
through the United States Postal Service, upon receipt; (c) when delivered by
hand, upon delivery; and (d) when telecopied, upon confirmation of receipt. Any
party hereto may by notice so given change its address for future notice
hereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be executed by
its duly authorized officer as of this ___ day of ___________, 2003.
SSP SOLUTIONS, INC.
a Delaware corporation
By:
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Name:
Title:
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